A California Chamber of Commerce-opposed “job killer” bill that denies employers the basic choice of whom to hire passed the Assembly Judiciary Committee this week.

AB 359 (Gonzalez; D-San Diego) inappropriately alters the employment relationship and increases frivolous litigation by allowing a private right of action and by requiring any successor grocery employer to retain employees of the former grocery employer for 90 days and continue to offer continued employment unless the employees’ performance during the 90-day period was unsatisfactory.

AB 359 will be considered next by the entire Assembly.

‘Job Killer’ Problems

In addition to the flaws identified above, the CalChamber considers AB 359 a “job killer” because it:

• Eliminates an employer’s opportunity to investigate applicants before hiring. AB 359 basically eliminates any distinction from one employer to the next regarding the type of workforce the employer can deliver. Additionally, by limiting a subsequent employer’s ability to properly conduct background checks of potential employees, AB 359 is setting up these subsequent employers for potential negligent hiring litigation.

• Undermines the at-will presumption in order to protect the incumbent union. Because AB 359 mandates subsequent employers to hire the predecessor’s employees for at least the 90-day retention period and, thereafter, terminate such employees only for unsatisfactory performance committed during the 90-day period, it limits a successor employer’s ability to voluntarily choose its workforce, thereby triggering the successor employer doctrine. “Unsatisfactory” performance is a higher standard to achieve than the current at-will presumption of employment in California and will essentially force an employer to offer continued employment to the predecessor’s workforce, thereby ensuring recognition of the incumbent union. If a successor employer actually chooses not to offer continued employment based upon “unsatisfactory” performance, it will undoubtedly face unfair labor practice charges and civil litigation by the employee or incumbent union.

• Forces an employer to adhere to terms of a contract to which it is not a party. AB 359 mandates a successor employer to abide by these contractual provisions, even though the successor employer is not actually a party to that collective bargaining agreement. Moreover, this provision of AB 359 places a successor employer in a vulnerable position for an unfair labor practice claim between the “terms and conditions” it establishes versus the provisions of the predecessor employer’s collective bargaining agreement.

• Does not provide stability or reduce unemployment in the grocery industry. Due to the fact that AB 359 mandates that a subsequent employer must hire all of the predecessor’s employees, the subsequent employer will be forced to either: (1) displace its existing workforce to take on the new employees or (2) eliminate positions it would have opened to new applicants in the grocery industry, as those positions will be filled by the prior grocer’s employees.

• Discourages investment in grocery establishments and jeopardizes jobs. Eliminating a successor grocery employer’s ability to voluntarily choose its own workforce will ultimately discourage those employers from investing in failing grocery stores or even taking over an existing grocery establishment.

• Offers no evidence that it preserves health and safety standards. Although AB 359 states that retaining employees of a prior employer will preserve “health and safety standards” in grocery establishments, the bill makes this presumption without any evidence as to how maintaining employees of a prior grocery establishment that was failing in some manner achieves this preservation.

Key Vote

AB 359 passed Assembly Judiciary on May 12 on a party-line vote of 7-3:

About Jennifer Barrera

Jennifer Barrera oversees the development and implementation of policy and strategy as senior vice president, policy, and represents the CalChamber on legal reform issues. She led CalChamber advocacy on labor and employment and taxation from September 2010 through the end of 2017. As senior policy advocate in 2017, she worked with the executive vice president in developing policy strategy. Before joining the CalChamber, she worked at a statewide law firm that specializes in labor/employment defense. Barrera earned a B.A. in English from California State University, Bakersfield, and a J.D. with high honors from California Western School of Law.